Buyers Have Gone On Strike In California
The Union Tribune reports from California. “The six-county region, including San Diego County, saw a year-over-year sales decline of 48.5 percent, to 12,455 transactions. That was the lowest monthly total since DataQuick began keeping records in 1988. Lori Staehling, next year’s president of the San Diego Association of Realtors, said she could not ’sugar-coat’ the latest statistics.”
“‘It’s a tough time; it’s not pleasant,’ Staehling said. ‘This whole soft-landing idea would be nice, but the number of sales is off so much and the inventory is so much higher than it was, it’s a huge struggle.’”
The Orange County Register. “A mid-summer credit crunch took a big bite out of Orange County’s housing market last month. Sales fell 44 percent from a year ago to 1,643 homes last month, according to DataQuick. That’s the lowest number of homes sold per month in the 20 years that DataQuick has tracked the local housing market.”
“The median price of an Orange County home fell 9.5 percent from the year before, dropping to $570,000. That price was down $75,000, or nearly 12 percent, from the peak price of $645,000 reached in June.”
“Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. ‘We decided there was no sense in giving it away,’ said Gorman. ‘The real estate market will come back at some period. … (We’ll) wait it out.’”
“Amid sliding home prices, banks foreclosed on 444 homes in Orange County last month. That total is up 469 percent from a year ago, DataQuick reported Tuesday.”
“And there appears to be few buyers for homes going into foreclosure. For example, during an Oct. 3 foreclosure auction at the Santa Ana courthouse, 33 out of 34 properties went back to the bank because no one bid.”
The LA Times. “In Southern California in September, home sales in six counties, Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura, fell 48.5% from the same month last year. They were at their lowest since DataQuick began compiling such statistics in 1988.”
“Garden Grove real estate broker Patrick Schwier, who specializes in apartment buildings, said he had sold 70% fewer buildings this year compared with the same period in 2006. Schwier said he saw two more years of falling sales and prices.”
“‘Prices were too inflated when credit was easier,’ he said, and now home prices, though they’ve been slipping, still ‘don’t make sense. And they will drop until they make sense.’”
“‘We’re on our way down and still picking up speed,’ said Christopher Thornberg, a Los Angeles-based economist who four years ago warned that the pace of housing price gains in the region couldn’t be sustained. Thornberg discounted the overall credit squeeze’s effect on the housing market. He said housing prices, pumped up for years by questionable mortgages, had to drop considerably.”
“The median income of L.A. County homeowners, he said, is at 60% of what’s required to buy a median-priced home in the county, assuming a housing budget of 35% of gross income.”
“‘This thing’s going to get worse when the peak of resets occur next year,’ Thornberg, the L.A. economist, said. His prediction: Southern California sales and prices will decline into 2009.”
The Daily News. “Looking to bottom feed in this depressed real estate market? Take a foreclosed home in Winnekta on the market for $404,900. The asking price is 24 percent lower than what the former owner paid in June of 2006, according to Realtor Steve Smallson.”
“The home, owned by Countrywide Financial Corp, now features a homemade sign with ‘Hurry’ and ‘Wow!!’ written on it to entice potential buyers.”
“‘We’re just trying to stimulate buyers, stimulate the market,’ Smallson said.”
“The three-bedroom house has been on the market for about two months and despite new carpet, it has received no written offers.”
“Geostat Advisory’s analysis of the Los Angeles and Orange County residential real estate markets suggest lenders that repossessed homes and condominiums are slashing sale prices similar to the discount offered on Smallson’s listing.”
“‘Lenders have to offload the nonperforming assets from their portfolios as soon as possible,’ Nima Nattagh, a principal in Geostat, said.”
“Not everyone believes that foreclosures are a big bargain. Yet. ‘There is a discount, but it’s probably in the 7 (percent) to 8 percent range and in most areas there is not much of a discount at all,’ John Karevoll, an analyst at DataQuick, said of Geostat’s assumption.”
“On average, a foreclosed property sells 20.3 percent below its market value. The median discount level is slightly lower in Orange County at 19.6 percent compared with 21 percent in Los Angeles County.”
“70 percent of homeowners who are foreclosed on bought their homes between 2003 and 2005. Homeowners who bought during this period and at the peak of the housing market are likely to be in a negative equity position now.”
“Neighborhoods that experience high levels of foreclosure are likely to see bigger price declines. For example, Geostat said that foreclosures in Lancaster sell at a much higher discount compared with cities in south Orange County.”
“Nattagh believes better deals are ahead. ‘If the inventory of foreclosures continues to rise and if prices remain soft there is a good probability that the discount rate could get bigger than this,’ he said.”
The Whittier Daily News. “The biggest price drops came in San Bernardino County, off 11 percent to $325,000, and Riverside County, off 10.8 percent to $375,500, DataQuick reported.”
“‘Things are clearly getting worse,’ said Christopher Thornberg, a principal with Beacon Economics. ‘It’s going to remain terrible for some time.’”
“Thornberg said the number of mortgages that are 60 to 90 days overdue is climbing, foreshadowing a higher number or foreclosures in the coming months.”
“Stephen Levy, senior economist at the Center for Continuing Study of the California Economy, noted that monthly home sales in the state have now dropped below figures from the early 1990s, when California’s economy suffered a recession.”
“But he believes it will take far less time for sales to recover during this housing slump.”
“‘Buyers have essentially gone on strike, and we need more price correction,’ Levy said. ‘In the early 1990s, because sellers got stubborn, it took seven or eight years to recover. I think this market will clear more quickly.’”
The Press Enterprise. “In September, Riverside County saw a 53.3 percent drop in housing sales compared to a year earlier, and San Bernardino County saw a sales decline of 56.1 percent, according to DataQuick. That is the sharpest sales drop in Southern California and greater than any seen during the last housing recession of a decade ago.”
“‘I don’t think this is just a one-month phenomenon,’ said Leslie Appleton-Young, chief economist for the California Association of Realtors. ‘I think in the next several months there will be more of the same.’”
“The median price of homes sold last month in Riverside County dropped to $375,500, down almost 11 percent from September 2006 — the steepest year-over-year decline in nearly two decades of record-keeping. Median prices in Riverside County have been declining monthly since April.”
“In San Bernardino County, the median home price in September dropped 10.8 percent from a year earlier to $325,000, after beginning a monthly slide in July. It was the largest year-over-year price decline there since May 1995.”
“James Monks, manager of Prudential California Realty’s Riverside branch, said buyers today are demanding deals and finding them primarily in the new-home and repossessed-housing market.”
“But even cutting prices does not guarantee a quick sale, since many would-be buyers are waiting to see if even better deals will be available in coming months.”
“James Mosebach said he and his wife, Sue, have had their three-bedroom house in Moreno Valley listed for $350,000 for three weeks with no takers, even though the couple paid $466,000 for the property in March 2006. Mosebach said about six other houses are for sale in his neighborhood and ‘new homes are being built all around us.’”
“‘It is kind of disconcerting right now. It is nerve-wracking,’ said Mosebach, who was laid off from his job as a production supervisor at a plant in the City of Industry and starts a new job next week in Ohio.”
“Mosebach said with all the competition in the market, it’s been tough to generate interest in his property, which sits on a half-acre lot with a swimming pool and spa. ‘We can’t afford to drop (the price) a whole lot more,’ he said.”
Inside Bay Area. “While the housing market is weakening by the minute, city leaders are strengthening the tools they have to secure homes abandoned by foreclosure. The Manteca City Council unanimously decided Monday night in favor of a series of ordinances that would secure vacant properties, primarily at the expense of the owner.”
“Slumping housing prices and bad lending practices have turned Stanislaus and San Joaquin counties into one of the nation’s leading areas for foreclosures. Manteca, a city that coins itself the ‘Heart of California’ because of its location, is in the center of the crisis.”
“‘This is a nationwide problem,’ Councilman John Harris said. ‘I think we are just entering the tunnel and I don’t see any light at the end of it. We have to take some action; this gives us some teeth as far as prevention.’”
“‘We haven’t seen the tip of the iceberg yet,’ added Councilman Steve DeBrum in reference to the number of foreclosure properties.”
“As of Oct. 1, Manteca has approximately 300 bank-owned residences, with about 800 homes in various stages of foreclosure, Police Chief Charlie estimated in a report, adding the number of bank-owned residences has been increasing by 10-15 homes per week.”
“In Manteca, the rise in foreclosures has not only led to brown or weed-filled yards, broken windows and swampy, mosquito-infested swimming pools, but also reports of vacant lots being used for homeless squatting and parties.”
“‘We’ve had significant issues in some of the houses where vagrants are moved in, bypassed meters and turned on electricity, squatters, they’ve become party houses for kids,’ Halford told the council, adding police responses have markedly increased and neighborhoods have been degraded.”
“He said: ‘This is an effort at the very least to get the bank owned residences maintained by the banks and maybe to get some of the homes in foreclosure, that haven’t been taken over by the banks, better maintained.’”
“Some residents argued the ordinances unfairly target the wrong people, while blaming the problem on too many homes being built outside the range of affordability. ‘This is wrongheaded. This is kicking someone when they are down,’ said Joseph DeAngelis.”
‘James Monks, manager of Prudential California Realty’s Riverside branch, said buyers today are demanding deals and finding them primarily in the new-home and repossessed-housing market.’
I recall SoCal foreclosure expert Bruce Norris saying about a year ago that we should forget about the homeowners and prices. That the comps will be set by the foreclosure market, and he looks to be exactly right. And, there is the added feature of the homebuilders rushing to get the last bit of crumbs before the lights go out, which many on this blog predicted. Nice!
Recall the arguments “the foreclosures are not used for comps” - LMAO!! Not when they represent 50% of the market!
Next up for the big squish will be long-term owners who must sell for death, divorce, retirement, or job relocation. Many will take $200K profit even though they could have had $400K profit a couple years ago.
Yeah, so. If they have/want to buy in another market they’re sure to get a deal that almost equates what they lost in equity. I don’t see your point…
The point is they could have bought the lower priced home plus have 200K in the bank.
I think this whole idea of lost equity is kind’ve a joke. Truely the only way one could BANK their RE lottery winnings would be to have sold a year ago or more and sit on the sidelines, maybe even for another year. I’d be curious to know how many people are doing this with 400K in the bank ready to pounce
I know of one very lucky friend who has exactly that amount in the bank. He “pounced” three weeks ago on a “million dollar property” in North County San Diego… Easy come, easy go.
I think the only way you win in this game is if you can take your equity, live where you want, and have no mortgage. Those who were able to kill the mortgage IMO are the winners. OUT.
Oddly - my wife are in that situation after selling in July. Instead of sticking around in the SF Bay Area we have moved out of country and become renters in a cheaper market.
This is fantastic! After years of ridiculous prices and crap shack flipping things are slowly coming back down to reality. I might not have to leave so-cal afterall…
I developed this theory in a very long post that never went through? So I’ll summarize. Please criticize at will but tell me what you think.
The government deal … 100% write off for any downpayment on a Homesead property… up to 100K? The catch being 100% of the refunded taxes on the downpayment amount are applied toward the house at refund. Offer good only for 2008 tax year.
It could provide a very large injection of liquidity into the housing market. It could be spun as a hedge to an inflating dollar. It creates a sense of ugency in the housing market, buyers and sellers both could be led to believe that “Now” is the time to buy. I think intelligent, if there are any, investors would be willing to deal.
Just a thought.
This isn’t an actual government proposal, is it? It’s a proposal you developed yourself?
While this would be a powerful incentive to inject $$ into the housing market, I think its effects would still be limited because most people simply don’t have much in the way of savings. You have to spend money in order to expense it, and if you do not have the money you cannot spend it.
There are precious few first-time buyers with more than $5,000 or so in the bank, and a $5,000 deduction (which equals $1400 — or less — in actual tax savings for the average first-time buyer) isn’t going to be much of an incentive for them.
This might act as an incentive for trade-up buyers, but any equity they are rolling over from the old house into the new is already not subject to taxation. And if I remember my tax law correctly, the equity from the old house is treated as capital, not income, so I don’t see how they would be able to deduct the amount of the equity from their income even if this proposal were enacted.
If a trade-up buyer wanted to contribute some cash to the trade-up downpayment in addition to equity from her old house, this would be an incentive to do that. But again, even most trade-up buyer can’t come up with very much cash. I’d be surprised if the average 40-something trade-up buyer could come up with more than $20,000? $30,000? Those sums are peanuts in bubble areas, less than 2% of the cost of many SoCal McMMansions.
Finally, people in a position to make a large cash down payment are probably smart enough to realize that the market is going nowhere but down for several years. Any (temporary) tax savings they may realize in 2008 will be dwarfed by the depreciation of housing prices.
For all of these reasons, I don’t think a proposal like this would do very much to prop up the housing market. Its impact would be limited at best.
No Ponzi, we dont want people to BUY houses. We only want them to SELL, and cheap.
I think the FB should be reconfiguring the McMansions as duplexes. That way the market will REALLY be flooded with housing units…
“Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. ‘We decided there was no sense in giving it away,’ said Gorman.
This greedy bast*rd deserves disappointment. Rossmoor is a 1960s development of plain vanilla small tract houses. They’re not worth $400K.
I don’t think he should give it away……sell it!
IMHO Rossmoor is hardly a typical OC neighborhood. They have a top ranked public school system, lot sizes there range from around 7500 SF up to 10,000SF, and those 60’s houses were considered high end when they were built. Over the years many of the houses there were extensively remodeled. More recently, the smaller, lower priced ones were being completely torn down and replaced. Some with ridiculously oversized McMansions.
Having said that, if Gorman has one of the smaller, original 1600SF houses, un-remodeled or updated, he is toast. In 1999 those were going for $500K, and prices will be back there or lower shortly. There are already plenty listed there now for well below his asking price. Greedy bast*rd indeed.
“His prediction: Southern California sales and prices will decline into 2009.”
If Thornburg is right in this prediction, where will it leave California’s numerous recent prime and Alt-A ARM holders, whose reset rates will likely be quite high come 2009-2010 (assuming the Credit Suisse chart is reasonably representative for CA)? Imagine facing a reset when the amount owed on the mortgage is 30 percent above the resale value of the collateral. What’s in it for the owner to stay in the game at that point?
I’ve also seen him quoted as saying it would be 2011 before it picks back up. I’m glad to see CT get a chance to shoot down the jumbo argument that Dataquick is now peddling.
I appreciate that Thornburg has been willing to stick his neck out and speak the truth. Let’s put it this way, I can type anything here or say anything about housing and it won’t effect my job; he spoke out when it impacted his employment. That took courage.
As to why would an owner stay in… any low down payment loan is a loan meant to be walked away from.
Got popcorn?
Neil
Remember when UCLA Anderson did their famous flip flop and said the correction would be minor? As I recall Mr Thornberg left shortly after. Sweet vindication!
Thornberg has much more of a MSM presence these days than does Ryan Ratcliff…
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Ryan Ratcliff: “California home prices never go down unless we are in a deep recession.”
Well, Mr. Rat Cliff, prices are down and we are in a recession after the home prices started to fall seriously.
Jas
What he also said that was not quoted:
“We have a big mess on our hands,” he said, referring to the nation’s faulty mortgage scene. “We have a high chance of recession in the next year.”
Turmoil in the housing markets will prompt consumers to spend less. This summer’s problems with the sub-prime mortgages (those loan packages marketed to under-qualified buyers that have low introductory interest rates which graduate to ever-higher rates, causing house payments to balloon) are the tip of the iceberg, he said.
“Housing is by no means done. The peak of the resets is in the middle of next year. The worst is in front of us, not behind us,” Thornberg said.
The national economy has other weak spots. Commercial markets are “out of whack.”
Economist Christopher Thornberg on the Real Estate Market’s Future
Oct 17, 2007
http://tinyurl.com/yqrkof
Watching Dr. Thornberg’s videos on youtube is one of the assignments the students have in my Real Estate Foreclosure: Debtors’ Rights, Creditors’ Remedies course. An extremely bright guy who had the guts to stand up to the pressures associated with calling it as he honestly saw it. It pains me to see the so-called experts ignore history and fundamentals. But I guess you can’t count on REIC donations to your foundation if you tell the truth.
Daniel
‘Ryan Ratcliff: “California home prices never go down unless we are in a deep recession.”’
A: California home prices go down
B: We are in a deep recession
Translation of Ratcliff’s statement into logical terms:
(not A) Xor B
= (not A and not B) or (A and B)
The status quo contradicts (not A and not B), which leaves the conclusion of (A and B). By Ratcliff’s own logic, California home prices are going down, implying that we are in a deep recession.
“California home prices are going down, implying that we are in a deep recession.”
Better wording: “California home prices going down implies that we are in a deep recession.”
stop managing expectation
“… any low down payment loan is a loan meant to be walked away from.”
Explain that to your local Congressman. You might also explain that markets without govt interference do a perfectly fine job of pricing risk — much better than an FHA reconstituted as a subprime lender could ever hope to achieve.
Real Estate
Mortgage Meltdown 2007 Archive
Goodbye subprime, hello FHA
At mortgage conference, lenders push back-to-basics theme for industry in coming years.
By Jeanne Sahadi, CNNMoney.com senior writer
October 15 2007: 5:49 PM EDT
BOSTON (CNNMoney.com) — If your credit is weak or your savings anemic, here are two phrases you’re likely to hear from mortgage loan officers in the next few years: FHA and mortgage insurance.
…
Lawmakers have been working on legislation to reform the FHA to modernize its standards so that they reflect changes to the housing market in the past 30 years. Among the changes on tap, lawmakers want to:
Raise loan limits. Today the FHA won’t insure loans above $362,790 for single-family homes, and even less in lower-cost areas. Lawmakers are considering raising that ceiling to at least 100 percent of the conforming loan limit for mortgages backed by Fannie Mae and Freddie Mac, currently $417,000.
Reduce down payment requirements. Homeowners would no longer be required to have 3 percent equity or the cash equivalent. They could get an FHA-insured loan with 0 percent down.
Reduce complexity. Lenders have been complaining about the time and expense it takes to make an FHA loan.
Separately, the Department of Housing and Urban Development, which oversees FHA, may move to introduce risk-based pricing. Riskier borrowers would have to pay higher premiums than less risky borrowers.
http://money.cnn.com/2007/10/15/real_estate/mba/?postversion=2007101517
“modernize its standards”
no dumb idea left behind
I want them to increase the FHA loan limits to at least 800k. Then, I can get a reverse mtg for the max (I’m 72) and mama and I can play every day at the local Indian casino. Just think, we’re helping the children and der Governator’s unbalanced budget. No brainer, eh?
Remember the guy in Manteca who was demanding the developer give bagholders some of their money back? My thought was, OK, guy next to you just bought your identical house for $200K less than you paid. Assuming the real estate market goes back to normal TODAY and starts appreciating at 3%/year, you’re looking at like 15-20 years just to break even. What is the incentive, if any, of staying? Even if you walk away and ruin your credit, you can buy again in 5-7 years.
………no wonder the banks are pissing their pants…..
Boy, I will tell you, I have had to go to Manteca once a month for the last 6 months or so….The housing problems there right now are massive….Dwarfs anything I have ever seen before and I have been through the last four downturns….
Remember the lemming effect. Once a few of their friends have done it (walked), and they see them getting along much better, it’s a rush to the door to get out.
Lemming Drops?
I can picture a comic strip where greedy, or uninformed home buyers race through the front door of their new house and actually enter a giant wood chipper where they are chopped up and sprayed out through the little chute. Ouch! Makes a Joshua tree seem quite mild.
Its late, but I wanted to catch back up on this thread. I do remember when Thornberg made quotes no other UCLA economist had the guts to back.
As ex-nnvmtgbrkr notes, the “lemming effect” will be in full swing soon. When? Doesn’t matter exactly, but it will be before summer 2008.
Got popcorn?
Neil
So true, but what everyone forgot as they scrambled to get “house rich”.
Got popcorn here. We have fields and fields of the stuff (corn) I’m no much for money, its more of a toy for the golden ring seeker’s. Over the last five or six years Ive watched as prices for everything exploded. My clean country town was infested with new home growth, homes way to big for this County’s wallet. It drove so many good man into their grave. it began when “We” as a mass believed that consuming is living .I seen this before, not this size but Ive seen this before. New bussiness moves in Morgages are given on pure hope. I watched the “Farmer home loans” housing boom in the mid- 80’s.Shooty homes built with inflatted costs thrown together by the hundreds. Those owners ended up dumping inflated shack’s on the newest money pit owner,many not even braking even. Ive watched and gave my two cent. Many thought I was a dooms day nutt as I prdicted crazy things like Oil reaching 90 bucks . So now the time has come, a time to level the playing fields. When its over I can see America changing in just the littlest of ways. A new genaration with basic skills worth more then the highs of degree’s.
I’m sure something can be done to band-aid this problem American is having, however its a little to late. Most of the world is feeling the first after-shock. We being the leaders of the world so many have mocked our practice’s. We lead them to a dark path. Now we have tilted the world as a unit,and thats not good. America has left its gaurd done and not just in the housing market. We have become over sized, conceeded ,drug addicted, money hungry snobs. A politic correct Union with focus on the dollor. Like I said I’m not much for money, but man this is worth watching. I put to dollars on mass lay- offs in home centers in ten months- car sells with drop by summer 08 by 25%.
I got popcorn with salt you?
Soros of Move On fame has a partner named Browne who is in a position of authority at the IMF. Soros is playing the dollar short and as the dollar goes down he is making billions in the forex markets. The more turmoil he can cause the US the better. The Dems are too stupid to see it.Or, perhaps they are also playing the short game.
Soros is a trader, not a traitor.
The mumbo-jumbo BS makes no sense.
Riverside and San Bernandino had the biggest drops in sales… they also had the biggest drop in prices. Both of their median prices are now below the jumbo amount.
If their sales had been up compared to other areas, okay, maybe I’d bite. But if you can get a non-jumbo for the average house in either area, and their sales are down more than anywhere else, how does that make sense?
http://www.dqnews.com/RRSCA1007.shtm
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“If their sales had been up compared to other areas, okay, maybe I’d bite. But if you can get a non-jumbo for the average house in either area, and their sales are down more than anywhere else, how does that make sense?”
San Bernardino is as insane asylum! In 2002-03 it was ranked #2 in the nation in violent crimes. I couldn’t believe the price run up and then the overbuilding that followed. 80%+ price decline is a given in such an area. Price increases moved from coast to inland and price decline would move from inland to the coast.
Jas
Re-reading what I wrote, I didn’t word that well.
I was trying to say that they are full of it when they tell us the reason sales went down is because it’s hard to get a jumbo loan. Those two counties have the lowest average price, and both are below the jumbo amount. So the average houses selling there did not require jumbo loans.
Despite this, sales there were down more than anywhere else.
So jumbos had nothing to do with it.
As you mention, there are other reasons sales would understandably be down…
“San Bernardino is as insane asylum! In 2002-03 it was ranked #2 in the nation in violent crimes. I couldn’t believe the price run up and then the overbuilding that followed. 80%+ price decline is a given in such an area.”
SB is by any measure the worst of the 6 counties. Riverside not to far behind. There are parts of San berdoo metro, colton,Fontana and Rialto which are abominable industrial wastelands, scarred and stripped-especaily along the 10 fwy from the 15 out to the 215. Fontana being a center for big-rig trucking operations does not add to livability.
Yes, Inner San Berdoo metro has Gang-bang problems as bad as inner LA.
Add to all this there was a massive buildup of new housing inventory in Rancho Cucamonga, North fontana, devore, Redlands, and on out to the hinterlands farther east along the 10 and up over the cajon pass into the hi-desert areas of the victor valley.
The entire hi-desert victorvile region is taking a bloody RE nosedive-too many new tracts put up in desert/scrubland wastes- and who the hell can afford tp pay gas to commute 100 miles one way from victorville to LA/OC.
Homes should revert to their natural price of $150,000-$200,000 for all of San Berdoo county. Median income household in SB is probably less than 50,000.
Apropos of “jumbos had nothing to do with it,” note how Thornberg “discounted the overall credit squeeze’s effect on the housing market.” I agree with him. As I posted yesterday, what I am seeing is, No Loan Demand.
Also, wasn’t it in the rumor mill that CT got ran out of the UCLA Anderson because he would not talk the talk ??
Beat me to it Ben….
I’ve also seen him quoted as saying it would be 2011 before it picks back up.
The fun part of this is that the “picking up” won’t be from the peak prices, or from now prices… it will be perhaps a picking up from the bottom… which we haven’t even seen yet. people who buy at the bottom may start seeing some increase in value in 2011. ;-D
That is why all these people deciding to hold off selling “until the market picks up” are going to get the Joshua Tree treatment. When the market picks up you will be able to sell your home for half of the current market value (which even now you consider “giving it away”).
Don’t you just love all the media advice “if you don’t have to sell your home now, pull it off the market and wait for better times”. Might as well say “if you don’t have to leave this towering inferno right now, wait until the crowds get through the exits.”
yep. the ones at the bottom might see a slight rise in values… but how much further down from here is it going to be from here?
oh boy the FBs are in for a rude awakening.
Isn’t surprising that they can’t figure out the math is that 2011 may bring the possibility of property gaining value from the bottom. they simply think if they hold out til 2011 THEIR properties will gain value! BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!
I think it is time for government to hold Federal reserve responsible for this economic disaster that this country in. They are playing with markets in order to make people like Mr. Buffet more billions, they call them INVESTORS, when people who don’t have much education in simple finances are paying a price to this investors. This is simple STEALING, Yes they call it CPITALISM but it is not fair. Sombody should stand for this people. You can’t play with peoples lives. We don’t need this kind of FEDERAL RESERVE.
The attitude has been, America is so rich that nobody has to bother with education in simple finances, or in anything else. The anti-intellectual atmosphere in the USA may possibly be a conspiracy of the privileged to keep others in the dark, but the others will now wake up, and perhaps realize that it behooves them to be literate and numerate.
“The attitude has been, America is so rich that nobody has to bother with education in simple finances, or in anything else. The anti-intellectual atmosphere in the USA may possibly be a conspiracy of the privileged to keep others in the dark, but the others will now wake up, and perhaps realize that it behooves them to be literate and numerate”
IT is not so much that there is an anti-intellectual atmosphere in the US is that The vast majority of the US citzenry are just plain ill-educated and dumbed down by watching too much garbage TV and sensationalist cable news which features endless tripe on the latest coed disappearance,ect.
The average joe has has at his disposal all the wonders of hi-tech informatonal technology such as iphones,internet cellular,DSL, broadband,ect. and an undreamed of access to a wealth of info beamed/streamed wireless all across america yet remains the same dumb uneducated schlub as 50 yrs ago.
I was well educated, read a lot and learned to compose/ write well pre-computer tech so got a decent education. Problem is there is so much hi-tech nowadays which i cannot easily pick up at mid-boomer age but the youth seem to pick up easily but also absorb a lot of crap culture and lack basic fundamental reading, numeration skills. When i discuss the housing bubble or any other financial issues, or even political- historical issues i am amazed at the level of ignorance among most folks.
This country’s lack of fundamental educational skils among it is citizenry is at the root of many problems in the US and why the Gov’t takes on increasing power and control over its dumbed-down citizenry via fake economic stats and televised/printed/internet propaganda press confrences/releases.
Remember that Germany before it was taken over by Hitler- thru the legal constitional process- was one of the most highly educated advanced states with a well- educated citizenry which nevertheless could be swayed by demagougery and mass hypnotic agi-propaganda.
He expects both sales and prices to decline until 2009. Perhaps he expects sales to slowly pick up after 2009 while prices continue to grind lower.
Tons of tax breaks by uncle sam and inflation from the FED. Yeah, their house isnt worth as much because of inflation but neitgher is the amount they owe, even though they will be upside down.
For the gov’t and IRS to forgive tax revenue will cause people who couldn’t or wouldn’t sell to finally pull the trigger. This will accelerate prices downward at a faster trajectory.
Where’s Moreno Valley? Shoot, at 350K for half an acre and a pool in California, maybe I’d be interested.
Bakersfield is better than Moreno Valley, enough said.
BTW - Crisp foreclosure update:
http://www.bakersfield.com/hourly_news/story/262172.html
Iv’e been to Bakersfield and MoVal and Bakersfield makes MoVal look like Beverly Hills. Moreno Valley aint that bad (except for the old Edgemont area down by March Field). Most of the city is new, built in the last 15 years. It’s no where near as smoggy as San Berdu as it sits up high behind a bunch of hills. Most of the LA smog goes to the north of MoVal. It’s still smoggy, its still hotter than hell in summer, there’s nothing in the city except homes and retail stores. It’s certainly no Manhattan Beach but it’s not that bad. In my job I get around and MoVal is a whole lot better than a lot of the cities I spend time in. One positive thing about that city is it has a very aggressive anti graffiti dept. You can drive around it all day long and not see a single tagged wall or sign. You sure can’t say that about most cities. I was over in Monrovia the other day and every friggin street sign was tagged as well as nearly every wall.
A home on 1/2 acre in MoVal should be $200k tops. That dude has no hope at even $350. There’s currently a FOUR YEAR supply of homes on the market there.
Where’s Moreno Valley? Think Tijuana with better streets.
Add this to the Tijuana comment. Moreno Valley has more smog than any other city in California. The smog from LA area blows directly into Moreno Valley every day. Every afternoon you can see a think yellow/brownish layer of smog.
Yeah, what is it with the IE lately. I was driving down Cajalco the other day and it was TJ!! My god, there were taco carts on every corner. My bro-in-law tells me on every weekends some of these guys open their garage doors and set up taco stands in the driveway (in new developments)
Think again about that 350K txchick.
I drove through Mead Valley on Cajalco a couple of weeks ago. Oh christ, what a $h!thole. I saw the Taco carts too. It’s been a few years since I took that road, I could not believe that they are building new homes up there, big homes too. Isn’t that the meth capital of SoCal?
Sheesh…And you told us that you were buying that small Taos Villa with the monster pool, hot tub and sauna txchick57 (:
It may be a buy at $200K; but $350K is too high. It is too far from employment centers and very hot in summer.
That 466K, currently 350K, was 200K back in ‘03, maybe even lower. I’ve been sayin’ for some time we’re going back to at least ‘03 pricing.
Txchick, what did you get into in the medicine cabinet. 350K in Moreno Valley is f-n INSANE! Enough said…..
“moreno” is “brown” in Spanish. At least they didn’t name it “Pedo Que Peso” Valley.
“moreno” is “brown” in Spanish. At least they didn’t name it “Pedo Que Peso” Valley.”
That is an apt description. Especially the brown, rocky completely barren hills which ring the north parts of the city. The entire city does have a drabness to it, maybe its the dry scorching heat, the barren empty fields around the now closed-up March AFB and along Alexandro blvd. Also the large Hispanic population of MV.
That said there has been some building up of infrastructures and commercial/industrail parks in MV. The Riveride county waste Facility is among a number of Gov’t/private firms recently built along Fredrick ave just north of former March AFB. Canyon Springs area at the junction of the 215/60 is another area seeing some latent industralization. Also there is the onging maddeningly slow widening/improving of the 60 fwy from MV to riverside Metro.
MV is a large sprawling uninteresting hot dry IE metro region, no better or worse that Riverside. redlands, North Fontana,temecula, Corona,Chino,Rancho Cucamonga, which are the closest comparison IE cities to it. All of these cities not bad nor good, just dull expanses of endless cookie-cutter housing and shopping centers, thrown in with that insipid IE 100% smoggy yellow heat and air 8 months of the year.
I think it is between Riverside and Temecula.
Actually, in the summer, MV is between Hell and Las Vegas.
No, hell is a very small town (about a block long) located adjacent to Las Vegas. Really.
Also, Hell is a town in Michigan. Very popular with the biker types, as you can imagine.
They used to say about Reno, Nevada, that it was so close to hell that you could see Sparks.
(Sparks being a suburb of Reno, FYI.)
Where’s Moreno Valley
It used to be called Scumymead, err Sunnymead. People called it Scumymead for so long they had to change the name.
TX, now you are a talkin’ to some of us with first-hand knowledge. Take all the negative comments about all the areas you have made on this blog because you know the area…Now multiply the sum of them by 10.
Moreno Valley….
Let’s see…
115 degrees in the shade at sunset in July, August, and September.
Commuter traffic a killer. 91 is one of the worst five freeways in the US.
SMOG! Need I say more about this one.
Too many people. Even at half an acre, it wouldn’t matter.
350K…not a chance. How about 150K, maybe. Then again 125K, absolute tops.
Sorry to rain on your parade. Just trying to be honest.
The one area adjacent to it that might have it beat is Perris. There’s a beauty spot for ya.
txchick57-
LOL buy a bullet proof vest before you close escrow.
no, you wouldn’t. MV is a PIT - unlikely to pass your muster.
“Where’s Moreno Valley? Shoot, at 350K for half an acre and a pool in California, maybe I’d be interested.”
MV is the next large riverside county Metro city just east/southeast of Riverside Metro along the 91/60 fwy. Not an especially pleasant city. Hills to the north are rocky and completely barren,there are bad slovenly parts ssouth of the 60 fwy-lots of projects and homeboys. Terrible commute traffic along the 60 as it merges with the 215/91 fwy going toward riverside metro.
Most of the city to the south of the 60 is flat and plain vanilla but there is one decent housing area to the north of the 60 off pigeion pass rd. Called Sunnymead ranch, it is almost spankin new and centered around sunnymead lake. It has some pretty decent homes, which says a lot about MV. Maybe this is where this fellows home is.
“The three-bedroom house has been on the market for about two months and despite new carpet, it has received no written offers.”
Well shoot ! I’m just a sucker for NEW carpets, sign me up there Clem !
LOL I was thinking the same thing
Welllll shit, if I had known $500 worth of new carpets were in the deal, I’d have thrown in the whole pig >; )
ROFL Mo !! I love reading this blog.
“In September, Riverside County saw a 53.3 percent drop in housing sales compared to a year earlier, and San Bernardino County saw a sales decline of 56.1 percent, according to DataQuick.
Yowza.
“Turn out the lights, the party’s over, they say all good things must end. Call it tonight, the party’s over. And tomorrow starts the same old thing again.”
re: rising foreclosures
Dear Orange County,
Congratulation and welcome to the party. We’ve been saving a place for you.
Signed,
Sacramento, Stockton, Modesto, Fresno, Bakersfield, Oxnard….
LOL nice…
dude, santa maria in slo county,.we party too
I drove thru Sanat Maria recently on my Central CA tour. Is this the ramshacke part of SLO? The rest of SLO looks pretty decent, green and spacious, at least from a los angeles perspective. Saw a lot of new housing buildup in the Pismo beach area, but otherwise SLO is sooo clean and wide open as compared with LA Metro.
Santa Maria is in Santa Barbara Co.
LOL!!!
“The home, owned by Countrywide Financial Corp, now features a homemade sign with ‘Hurry’ and ‘Wow!!’ written on it to entice potential buyers.”
“‘We’re just trying to stimulate buyers, stimulate the market,’ Smallson said.”
hurry and wow ought to do it, mister stimulation?
“‘We’re just trying to stimulate buyers, stimulate the market,’…”
That’s what the strippers tell me in Vegas.
hurry and wow ought to do it, mister stimulation
“That’s what she said”
“Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. ‘We decided there was no sense in giving it away,’ said Gorman. ‘The real estate market will come back at some period. … (We’ll) wait it out.’”
We doubt it. Your best move would be to drop price 5% every 3 months until it sells. You will regret keeping it even if yu got money to burn.
Jas
“Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. ‘We decided there was no sense in giving it away,’ said Gorman. ‘The real estate market will come back at some period. … (We’ll) wait it out.;
maybe grandkids will breakeven in many many years
So, has the guy Gorman actually figured out the burn rate on trying to hold onto this investment property for what, 3-4 years minimum?
No, that would be hard.
He would have to use a calculator.
Maybe he will enjoy trying to be a landlord.
Maybe his tenants will trash the place.
Maybe not. Maybe he can’t find tenants to cover half the mortgage.
Maybe he’s not really an investor, just a guy with an extra house that he can’t unload.
Maybe investor sounds better to him than FB.
Not just the burn rate, but the market value of that house will be FALLING for 4 years, flat for another 4-5, then slowly creep up. In real dollars, he might NEVER again see even the current market price (far below his lowered asking price).
Groundhogday, I believe you are right about the “never.” Not before Century 22, anyway. Too many people will remember, and tell their children, that you should not pay much more to **own** than to rent. With that constraint, real prices of houses cannot even approach present levels.
LOL!!!
Orange $hag, no doubt…
“The three-bedroom house has been on the market for about two months and despite new carpet, it has received no written offers.”
“Orange shag”
An apt description of the OC market in the coming months…
A-Y.D.S. victim
Appleton-Young Delusional Syndrome
“‘I don’t think this is just a one-month phenomenon,’ said Leslie Appleton-Young, chief economist for the California Association of Realtors. ‘I think in the next several months there will be more of the same.’”
heh.
several = 36 or 48 or 72
–
“On average, a foreclosed property sells 20.3 percent below its market value. The median discount level is slightly lower in Orange County at 19.6 percent compared with 21 percent in Los Angeles County.”
No, they sell AT the market prices. You just have the wrong idea about the market value. You should do daily updates of the market prices based on REOs and foreclosure sales. We are in a fast market. And you are tardy.
Jas
Housing depression raises recession risk
Builders slam on brakes, taking starts to 14-year low and permits to levels not seen since 1995; both readings fall short of forecasts.
By Chris Isidore, CNNMoney.com senior writer
October 17 2007: 2:01 PM EDT
NEW YORK (CNNMoney.com) — Builders continued to slam the brakes on new homes in September, with levels hitting their lowest point in more than a decade.
The government’s latest reading on the battered market Wednesday suggests the slump in home building could be much deeper than earlier estimates and could become a bigger drag on the overall economy than previously feared.
Housing starts fell to the lowest level in 14 years in September.
It also raised the prospect that the Federal Reserve will have to go ahead with interest rate cuts in an effort to avert the U.S. economy from falling into a recession.
http://money.cnn.com/2007/10/17/news/economy/housingstarts/index.htm
Interesting how the stock market is sputtering despite the obvious signs that the Fed will have no choice but to further lower the FFR at the next FOMC meeting.
I don’t believe the Fed’s can save the economy by lowering the interest rates in 0.5% increments.
As a world economic leader what we really need back are those shady mortgage loans. Then everyone and their brother can qualify for jumbo loans and then create an artificial demand. This would then reduce inventory levels and thus stablize RE prices.
Jeeze
These Fed guys are so silly.
HOW THE FEDERAL RESERVE THINKS:
or how to be a Federal Reserve Banker
“You’re training the cattle at the same time you’re training your horse. Teach the cattle to yield quietly to pressure, so they’ll be easy to handle. Avoid training the two extremes - dead and dull or wild and unyielding. Use the same training philosophy as with horses: Make the right thing easy and the wrong thing difficult. Reward a cow for doing the correct thing by removing pressure. Always set up situations so your horse and the cattle come out winners. This means your horse and cattle respond how you want them to and without force or stress.
Cattle are intelligent, thinking fight-or-flight animals. They want to get along in their world and have things as safe, routine and predictable as possible. They’re very trainable, as with a horse, and if approached correctly, will learn to handle with ease and finesse.
To help better understand how cattle operate naturally when you approach them in a pasture, consider these suggestions to help make things go well.
# How you start the day could determine how the day goes. Starting the day with a positive attitude toward the cattle work helps make things go better.
# When gathering or checking cattle in a pasture, approach them at an angle rather than straight on.
# Individual cattle have a flight zone. Depending on the cow, the flight zone can be very large or very small. Neither is desirable. Ideally, a cow’s flight zone is large enough that it takes little to get her to pick up her calf, move out and stay with the herd. A yearling or bull would go from being shaded-up to easily moving out with the herd. For all cattle, the flight zone should be small enough that the cattle don’t put a “9″ (kink) in their tails and run off when you enter the pasture. This zone should be large enough that cattle move when approached, especially through trees and brush.
Flight-zone determination begins when you first spot the cattle in the pasture. If all the cattle look at you, they could be nervous with larger flight zones. If they look in various directions, graze, lie down or stand chewing their cuds, they’re more relaxed. Adjust to fit the situation.
When you penetrate a cow’s flight zone and it moves, ease the pressure by moving back to the flight zone’s edge. Do this by stopping, backing up, or moving away at a wide angle, etc. Avoid putting too much constant pressure on cattle when they move; that only trains them to be dull, just as it would a horse. Instead, stay at the flight zone’s edge as long as the cattle keep moving. Moving away farther with no pressure should cause the herd or a cow to slow and/or stop. There’s a real balancing point between applying too much or not enough pressure to keep the cow or herd moving. With experience, this point becomes more recognizable.”
From Western Horseman
“When you penetrate a cow’s flight zone and it moves, ease the pressure by moving back to the flight zone’s edge. Do this by stopping, backing up, or moving away at a wide angle, etc.”
Sounds like the instructions that come with my Joshua tree kit.
.:D
They can reduce the rate back down to 1% and it STILL won’t make prices much more affordable in CA. Fixes rates were never below 6% anyway. On a $750K house (a condo in WLA) that is still a $45K mortgage.
The only way they can restore “affordability” in CA is to (1) let deflation run its course, or (2) cook up and implement a scheme (similar to the one often described here by nhz) that restarts housing price inflation by helping many folks to again qualify to buy homes with loans their incomes will not ultimately allow them to pay off. Option (2) is destined to fail, as it does nothing to fix the problem of builders building more high-priced homes than fundamental-based purchase demand can absorb, but it appears that politicians are nonetheless moving ahead with plans.
Real Estate
Mortgage Meltdown 2007 Archive
Goodbye subprime, hello FHA
At mortgage conference, lenders push back-to-basics theme for industry in coming years.
By Jeanne Sahadi, CNNMoney.com senior writer
October 15 2007: 5:49 PM EDT
http://money.cnn.com/2007/10/15/real_estate/mba/?postversion=2007101517
Do you mean $45k/year?
That’s what was apparently meant. Because there will no longer be purchases without down payments, the actual loan interest would perhaps be less than $45K. On the other hand, I/O and Neg-Am will be out too, so the mortgage payment must include some amt for amortization.
I’ve had a number of scab buyers try and get past our picket line, but so far we’ve been able to dissuade them very easily…
Reporting from local 49
“Stephen Levy, senior economist at the Center for Continuing Study of the California Economy, noted that monthly home sales in the state have now dropped below figures from the early 1990s, when California’s economy suffered a recession.”
Bingo, Steve!
Jas
The Daily News. “Looking to bottom feed in this depressed real estate market? Take a foreclosed home in Winnekta on the market for $404,900. The asking price is 24 percent lower than what the former owner paid in June of 2006, according to Realtor Steve Smallson.”
“The home, owned by Countrywide Financial Corp, now features a homemade sign with ‘Hurry’ and ‘Wow!!’ written on it to entice potential buyers”
Also sung to the tune of “Gimmie..Gimmie …a Fool to Rush In”
I think they mis-read those signs… they say “It Hurts” and “Owww!!!”
I wonder if the sign was written in crayon?
Maybe the house is painted with crayon.
You know, signs that say “Wow” and “Hurry” always get me. I mean, I would have just ignored the house if it weren’t for the homemade sign that said “Wow”. I’ve gotta see the house now.
Countrywide is going to have to learn to speak to its new audience. Now that all the preschool dropouts are out of the market, today’s RE brokers will have to start using intelligent-sounding slogans.
post a picture!
They’re holding one of the signs upside down. They were supposed to say “Mom! Hurry!”
As in, please bail me out before that big meanie the bank takes my lunch money.
“The Daily News. “Looking to bottom feed in this depressed real estate market? Take a foreclosed home in Winnekta on the market for $404,900. The asking price is 24 percent lower than what the former owner paid in June of 2006, according to Realtor Steve Smallson.”
Does anyone here with knowledge of the San Fernando Valley have any opinion as to the area of SFV which includes Winnekta, Reseda,Northridge,Canoga park. It seems to me that that entire area is nosediving and becoming a bit slummified/Tijuanized with too many apts and rampant overbuilding of multi-units. I know that Northeast SVF is a slimepit but this area which i call central SVF looks in transistion, and rather downward transistion at that.
Eh, just give ‘em frequent flyer miles to offset the huge loss they take on buying their house. Problem solved.
http://biz.yahoo.com/prnews/071017/new045.html?.v=23
–
‘In the early 1990s, because sellers got stubborn, it took seven or eight years to recover.”
Why, Steve, we got new and improved sellers these days?
Jas
Eh, just give ‘em frequent flier miles to offset the huge loss they take on buying their house. Problem solved.
http://biz.yahoo.com/prnews/071017/new045.html?.v=23
Will the Fed make more cuts? Yes, even though the rate is already ridiculously low. I’ve noticed a change in the tone on Wall Street these days. Just last week the opinion was: ” Oh- you mean the credit crunch? That is sooo August. We’re in good shape now!”
Of course the Fed will make another cut. The attempts to artificially stimulate the market is via cuts is ultimately a very costly mistake.
What are you talking about? Our economy is so strong and diverse. You guys make it sound like our country can’t operate without endless amounts of cheap debt….
I was having a discussion with a relative (recent FB) when I said that the FED knew the subprime would melt down the economy and the housing bubble had burst. He asked me, why would “they” allow the US to commit financial suicide? Good question.
It could be that the powers that be want NAFTA to be successful, and the only way America will accept the new money, the Amero, would be to devalue the US dollar. I put away my tin foil hat until I happen to find this gem:
http://www.globalresearch.ca/PrintArticle.php?articleId=7057
“The U.S. dollar might be destined to disappear, replaced by a regional currency called the amero, reports the Tokyo correspondent for the Singapore Business Times today.
“Truth is said to be stranger than fiction sometimes, and what I hear about the future of the U.S. dollar may sound like pure fiction, but the sources from whence the reports spring are, as they say, ‘usually reliable’ ones, and so they do have a ring of truth to them,” writes Anthony Rowley.
Rowley says the slide of the U.S. dollar in relation to other foreign currencies makes such a transition more likely.
“And, looking at the size of U.S. debt to all those foreign central banks and private investors who obligingly finance the American current account deficit, similar conclusions might be drawn,” he writes.
Because the U.S. is not going to stand by and watch its currency depreciate forever, he says his sources in the monetary and financial establishment plan a new currency that would take trade and investment cooperation within the North American Free Trade Agreement, or NAFTA, into new areas of monetary cooperation – leading ultimately, perhaps, to a common currency for the U.S., Canada and Mexico.
In addition to the name “amero,” Rowley says the name “americo” is also under consideration for this new currency.
“It would be a currency more likely to be judged worth the paper it is written on than the obligations of a highly indebted U.S.,” he writes
Rowley says there is also talk of an Asian monetary union and common currency.
The commentary follows what appeared to be confirmation of the common North American currency plan by former Mexican President Vicente Fox, who told CNN’s Larry King this week that he and President Bush had agreed on a regional currency for the Americas.
White House spokeswoman Dana Perino told WND she’s not aware of any plan for such a currency either.
The statement by Fox was perhaps the first time a leader of Mexico, Canada or the U.S. openly confirmed a plan for a regional currency. Fox explained the current regional trade agreement that encompasses the Western Hemisphere is intended to evolve into other previously hidden aspects of integration.
According to a transcript published by CNN, King, near the end of the broadcast, asked Fox a question e-mailed from a listener, a Ms. Gonzalez from Elizabeth, N.J.: “Mr. Fox, I would like to know how you feel about the possibility of having a Latin America united with one currency?”
Fox answered in the affirmative, indicating it was a long-term plan. He admitted he and President Bush had agreed to pursue the Free Trade Agreement of the Americas – a free-trade zone extending throughout the Western Hemisphere, suggesting part of the plan was to institute eventually a regional currency.”
Mexican military in border standoff with Texas police
Headline from same organization
LOL
I bookmarked this one to cheer me up when depressed.
FLUSH TO JUDGMENT
‘I go to bathrooms to use bathrooms’
Sen. Larry Craig says he was entrapped, had no idea restroom was homosexual hotspot
Wow, that’s rich. The entire adult population knows that men’s restrooms (not to mention certain rest stops and nature parks!) are homosexual hotspots. Next thing you know, he’ll be telling us that he didn’t know that having strong urges to play ‘hide the wiener’ with other men means you’re gay.
You’re right. That headline did bring a smile to my face.
Mr. Senator, the correct response for a public official caught in such a situation is “The b*tch set me up!”
Might not work for Craig, he being a person of pallor and all.
What!!?? I didn’t know that mens restrooms are hot spots for homosexual activity. I’m sure my husband will be disappointed to hear about this.
I thought that was all some kind of bizzare urban legend.
If you are sure that they will give a rate cut, you can be a multi millionaire in a few weeks time. The market has gone from 44% chance of a rate cut to 28% chance of a rate cut.
Sorry, when the pundits are projecting CPI at 0.2% and it comes in 50% worse. The Federal Reserve has few choices. There is a feeling in the pits ~10% feel that the rates could be raised again. The voting members of the Federal Reserve have to decide if they are going to fight inflation. Unfortunately we will not know the whole story for 5 years.
“Some residents argued the ordinances unfairly target the wrong people, while blaming the problem on too many homes being built outside the range of affordability.”
What we truly need is better targeted ordnance designed to take out the people that caused this in the first place..MISSION ACCOMPLISHED type stuff.
“Some residents argued the ordinances unfairly target the wrong people, while blaming the problem on too many homes being built outside the range of affordability. ‘This is wrongheaded. This is kicking someone when they are down,’ said Joseph DeAngelis.”
Yeah, I’m real sorry you aren’t taking care of your property loser.
You guys on this blog are good! The RE market is developing just like many on this blog predicted. Kudos.
It’s obvious now. But it’s taking so fricking long. I want to buy a 250K home now please. But I’m in central coast CA and I have to wait 3 to 5 more years? What a mess we are in? This is crazy. I’m serious. The US is going into the crapper and all I see on the MSM is how Britney lost her kids and her mom is moving in. WTF
Norcal and FOOSE, what did you expect? This is a country that only “sells one another back rubs and poems”, as one bard on another blog put it.
Well, I for one feel sorry for Britney. That loser Federline (notice the “Fed” part, your first clue) was obviously just using her from the beginning. She was young and naive, and now she has all these media people constantly harrassing her, making her job as a mother nearly impossible, and criticizing every little thing she does. And that mean old judge is going along with it. It’s not right for a judge to take two kids away from their mom just because she’s not Mrs. Cleaver. There are a lot worse moms out there, after all. And besides, Fed-er-a-line isn’t exactly Cleaver material himself. He’s a dirty, low-down, loser and he’s using his own kids!
You started it.
God help us. Could the above comment get deleted? I wish I hadn’t read it.
I thought it was funny.
And at least Ms. Paris Hilton was not mentioned. lol
Yes, deletion is most definitely called for. But ironically Hazard, it was your comment that made me go back and read it — several times in fact. For the safety of all concerned and to prevent other innocent parties from permanent injury, this whole section (including your comment) should be deleted. Ben, some help please?
I liked it, too.
oh come on now..that was post from one of our beloved FBs…
just an exhibit of the times we`re enjoying, any wonder why the US is in the predicament its in? just read the post again..
Britney lost her kids you bastard, and all you can think of is the biggest credit bubble in history..lol
“have to wait 3 to 5 more years?”
FOOSE, we are all in the same boat. Renting is not completely comfortable, but you can watch your money grow while you wait. When buying costs only a little more than renting, it will be safe enough to buy, even if it might be cheaper to wait a little longer.
“James Mosebach said he and his wife, Sue, have had their three-bedroom house in Moreno Valley listed for $350,000 for three weeks with no takers, even though the couple paid $466,000 for the property in March 2006. Mosebach said about six other houses are for sale in his neighborhood and ‘new homes are being built all around us.’”
Try 299K before it is too late! If you don’t act now you are looking at a halfer @ 233K. Market would be full of halfers and more in a year.
Jas
You only see about 1/8th of an iceberg’s mass, above water.
“‘We haven’t seen the tip of the iceberg yet,’ added Councilman Steve DeBrum in reference to the number of foreclosure properties.”
I guess that means he’s underwater.
As Gloria Steinem said “Logic is in the eye of the logician.”
You see 20% of it. That’s 1/5.
“The Manteca City Council unanimously decided Monday night in favor of a series of ordinances that would secure vacant properties, primarily at the expense of the owner.”
I love the last part.
Jas
“The home, owned by Countrywide Financial Corp, now features a homemade sign with ‘Hurry’ and ‘Wow!!’ written on it to entice potential buyers.”
Well if that doesn’t reel them in, I don’t know what will.
they could attach “for sale” signs to brass poles, uh you can imagine the rest!!
Well that would be the next employment opportunity for some young hot ex-real estate professionals. Once a Hoe always a Hoe
“Mosebach said with all the competition in the market, it’s been tough to generate interest in his property, which sits on a half-acre lot with a swimming pool and spa. ‘We can’t afford to drop (the price) a whole lot more,’ he said.”
..and abscent some stupid, mumbo, dumbo, jumbo, toxic, IO, neg amort, ARM, ninja, stick a needle in your eye mtge product, buyers can’t afford to pay your wishing on star, tooth fairy, bake me some cupcakes, feed the #$%@ squirrels price…
‘We can’t afford to drop (the price) a whole lot more,’ he said.”
Yes, but the market can afford to drop it a WHOLE lot more, FB Boy.
What the buyer can afford to pay is much more important that what the seller needs to get out.
yep WTF, yep, unfortunately, the sellers won’t get that, until the bitter end.
Good one Pen…
Thanks..I had a really good day work, ten cups of coffee and I’m totally wound…
..for the folks in Cali, “I’m wound, like totally, wound.”
The upside is they’re going to OH where he already has a job and they will get that same house & amenities for around $100K in a good neighborhood.
The most amazing part of that story is that he found new employment in Ohio.
From an article on Yahoo finance..
Only the Northeast showed construction gains in September with activity rising by 45.4 percent in that region.
WTF…I am about as Northeast as you can get (Boston, MA - North Shore)…Let me tell you, I drove through a few newly carved up subdivisions over the last few weeks and there is no sign of life. There were more tumble weeds blowin’ around than int eh corn field where Neil sources his popcorn.
Now, maybe by Northeast, they don’t mean the burbs of Boston, if so..fine.but I find the +45% number pretty suspect..unless of course, they went from a base number of 2, up 45% to 3 (or something like that)…or unless they mean apartment complexes, which seem to be growing faster than the for sale/for rent signs..
OT - SEC is probing Tangelo’s stock sales.
http://tinyurl.com/37ur4a
State of MA AG has also filed suit on behalf of the MA State pension fund.
They oughta take a look at their fund manager too.
The image that comes to mind is of Angelo Mozillo and Bob Toll sharing a cell and eventually becoming lovers. When they are released they will go by the name Mr. and Mr. Bob Toll. I might even send them a wedding present.
Can Mozillo get a tanning bed as well?. Oh, I forgot, this is the new prison system, with congigal visits, TV, ac,steak on Sunday. You’ve got the picture.
till the economy tanks and we decide to turn on the gas in the showers.
Foreclosures, Bankruptcies and Financial Ruinations along WITH Recession…
Ghee Maw…who even KNEW that their WAS a Flip side to Runaway Leveraged Cannibal Capitalism ?
–
“Buyers Have Gone On Strike In California”
Sellers need to form a union to stick together and not lower the prices. This will force buyers to pay up or shut up. You want cheap shift then go to Oklahoma and Texas. In California, only classy people who don’t worry about the price have the right to own their homes.
We will have a law passed that would forbid lenders to foreclose. You made the mistake and now we will force you to live with it.
Jas
“‘This is wrongheaded. This is kicking someone when they are down,’ said Joseph DeAngelis.”
You dont really need to find out whats going on
You dont really want to know just how far its gone
Just leave well enough alone
Eat your dirty laundry
http://www.youtube.com/watch?v=9Uu8ga3IDsM
“This whole thing about not kicking someone when they are down is BS – not only do you kick him – you kick him until he passes out – then beat him over the head with a baseball bat – then roll him up in an old rug – and throw him off a cliff into the pounding surf below!!!!” – Mr. DeLay’s right-hand Michael Scanlon
“James Mosebach said he and his wife, Sue, have had their three-bedroom house in Moreno Valley listed for $350,000 for three weeks with no takers, even though the couple paid $466,000 for the property in March 2006. Mosebach said about six other houses are for sale in his neighborhood and ‘new homes are being built all around us.’”
“‘It is kind of disconcerting right now. It is nerve-wracking,’ said Mosebach, who was laid off from his job as a production supervisor at a plant in the City of Industry and starts a new job next week in Ohio.”
Mr. Moseback is what’s known as ‘dead meat’. Leaving for a job in Ohio and a house he can’t sell at any price. Total equity is gone, gone, gone. I find it interesting that the only job he can find is in Ohio. In real terms it probably means moving in with relatives. So much for ‘California dreaming’.
I keep seeing statements to the effect that “Jumbo loans were hard to get during that old credit crunch that happened in September or August, but credit is back on and jumbos are popping up like crazy again, so prices should shoot back up.” I want to know why everyone is saying this. Is it really easier to get a jumbo loan today than it was last month? If so, why? Is the credit crunch over?
Easy to get. Hard to pay.
I haven’t seen this mentioned yet, but please forgive me if it’s a repeat.
Driving in to work today, a radio ad came on for Pulte homes.
It starts out with, “HOMEBUYERS, BE AFRAID,… BE VERRRRY AFRAID”.
I nearly lost it, laughed out loud. How is that for future deniability in any potential lawsuit.
Pulte lawyer: Is it true Mr. Sixpack that you heard about the home you bought while listening to radio commercial in October of 2007?
J6P: Why, yes.
Pulte lawyer: And what was the advice given by the ad?
J6P: That I should be verrrry afraid?
Pulte lawyer: Your honor, the defense rests.
You really can’t make this stuff up, it’s far too bizarre.
sellin what, termite inspections? retro-active due-diligence?
“‘I don’t think this is just a one-month phenomenon,’ said Leslie Appleton-Young, chief economist for the California Association of Realtors. ‘I think in the next several months there will be more of the same.’”
Be careful, statements like those’ll get you fired Leslie. Then again, maybe that’s what she wants.
Given that NAR was so vocal and public with their “Home prices won’t go down, permanently high plateau, not making any more land, historically low rates, Boomer demographic demand , retirement home demand, immigrant demand, etc. rhethoric”, I wonder if it would be possible to have a nation-wide class action lawsuit against all members of NAR? I know it sounds pretty far fetched, but very senior people within their employment made these statements.
Of course a suit is possible! Winning the suit may not be, somebody has to pay the lawyers.
A simple defense would be “if the mortgage banks had required full documentation as well as reasonable down payment then Real Estate would not have gone down.” Not our fault.
“Stephen Levy, senior economist at the Center for Continuing Study of the California Economy, noted that monthly home sales in the state have now dropped below figures from the early 1990s, when California’s economy suffered a recession.”
“But he believes it will take far less time for sales to recover during this housing slump.”
Beliefs about how the bust will play out are best supported with empirical evidence.
Come on Prof G.S. Bear, Mr. Levy does not let his primary contributions and grants, which come from vested real estate interests, interfere with an unbiased view.
He doesn’t let contradictory evidence from previous busts interfere with potentially-biased beliefs, either.
hey, we dont want any trouble in here, not in any language.
“‘I don’t think this is just a one-month phenomenon,’ said Leslie Appleton-Young, chief economist for the California Association of Realtors. ‘I think in the next several months there will be more of the same.’”
Leslie back to normal throwing the bs again eeehhh?
Next several months? Leslie you did not get humbled before with your pathetic comments at the peak?
Humbled? Heck she probably got a bonus for bringing more pigs to the slaughter.
“Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. ‘We decided there was no sense in giving it away,’ said Gorman. ‘The real estate market will come back at some period. … (We’ll) wait it out.’”
This makes some object come to mind…roundish…baseball size…green…a pull-pin on it - oh wait, there’s no pull pin…and what’s that sound? Tick…tick…Tick…Tick…
I think Gorman is a philanthropic genius. He’ll try to give his house away at a much lower price, as his last greatest and kindness gesture to his neighbors.
I hope this isn’t a double post:
“Those are the affluent neighborhoods in Orange County, so these people didn’t indulge in the (exotic loan) craziness nearly to the extent that others did,” said Walter Hahn, an Irvine real estate consultant.”
Oh yeah? Prove it.
Ah yes, the same ol’ “It’s different here” song. Sure, I live here and I am the poorest person here. Everyone makes 7 figures, didn’t you know that?
“‘We’ve had significant issues in some of the houses where vagrants are moved in, bypassed meters and turned on electricity, squatters, they’ve become party houses for kids,’ Halford told the council, adding police responses have markedly increased and neighborhoods have been degraded.”
In Manteca it’s an awful time to be an owner or a seller and not yet a good time to buy. This means of course that it’s a great time to be a alcoholic teenager or a vagrant. I remember a bit of this going on in the early 90s when I was a teenager but I had no clue that there was a down real estate market at that time that was the cause of it all. I just thought having a lot of vacant houses around was a normal kind of thing.
“it’s a great time to be a alcoholic teenager or a vagrant”
A new mantra for the Inland Empire is born.
Time to buy?
Not a chance. The storm hasn’t even started yet. We’ve only seen the first few raindrops. If anyone has kept track of the real estate market, they can tell that house prices have a long, LONG way to go yet before they stabilize. There is NO one currently saying we’ve hit the bottom, or any kind of indication that prices have stabilized. On the contrary, they all see prices falling for a long time yet to come.
I would personally wait around 2 years before buying. By then, prices will be around 20 cents on the dollar. You could offer $60,000 cash, on a $300,000 house. The buyer would accept it, and thank you for it.
There’s an old saying (in terms of investing):
you make your money at the time of purchase. Meaning = if you pay too much, or buy at the top of the market, you will have a tough time making any money on the purchase, or even surviving financially.
Now, there will be a lot of bloodletting in the next few months. There will be Soap Opera melodrama, families thrown out in the street, huge “fire sale”, Once in a Life time Investment opportunities, airplanes doing sky writing: “BUY THIS HOUSE N-O-W” kind of thing.
Ignore it.
Wait until the bleeding hits the maximum.
Then go in, quietly, and buy.
I’ve been thinking in terms of when things get back to fundamentals (rental value, income multiples), but of course things will probably swing far BELOW fundamentals over the next couple of years. My guess is that by 2010, it will be MUCH cheaper to buy than to rent in most markets.
Right, but there won’t be enough people who have a down payment and good credit to actually buy houses. The same factors that caused the bubble, when reversed, will cause the implosion.
Not to mention zero equity for trade-up.
Median house prices will directly reflect the median income available to support an 80% mortgage and not a dime more.
Lardly worth it?
“In Manteca, the rise in foreclosures has not only led to brown or weed-filled yards, broken windows and swampy, mosquito-infested swimming pools, but also reports of vacant lots being used for homeless squatting and parties.”
‘We decided there was no sense in giving it away,’ said Gorman. ‘The real estate market will come back at some period. … (We’ll) wait it out.’”
Hey Rickyboy, you ain’t seen notting yet. wow you are in for a big humbling slap in the wallet.
‘We decided there was no sense in giving it away,’ said Gorman. ‘The real estate market will come back at some period. … (We’ll) wait it out.’”
Even with all the articles about Subprime and lending fraud and hedge fund blow-ups and tighter standards, people don’t seem to get the connection. Without zombie financing, their “wishing price” is gone, probably for good. How bad does it have to get before people get that?
Lisa. So true.
Giving it away when it is only a $50K price reduction??? WTF?
The entitlement to huge profits mentality is really going to be a painful lesson for this guy.
Looks like another GF looking for a Joshua tree “cleansing”.
Yup. Or, put another way, $.9 MILLION BUCKS = “giving it away” in this guy’s mind. How screwed up is that?
I hope Mr. Gorman is a young fella. Otherwise he might not be around when that “some period” arrives.
“I would personally wait around 2 years before buying. By then, prices will be around 20 cents on the dollar. You could offer $60,000 cash, on a $300,000 house. The buyer would accept it, and thank you for it.”
I want to buy a house at an acceptable price, but you are sounding a little like the delusional greedy sellers .
I don’t think so. It’s about time these greedy sellers get their comeuppance. What I hear is someone who is sick and tired of witing for this whole thing to finally implode on itself.
Aaron Smith, an economist with Moody’s Economy.com Inc.
“It is clear that recent stress in financial markets and tighter lending standards have increased the severity of the housing adjustment and lengthened the timetable for recovery,” Smith said.
When will recovery happen?
Home inventories will not show definitive improvement until new listings and new home completions begin to decline with more vigor. That won’t happen, Smith argues, until house prices fall no less than 10%.
Yet Realtor groups across the country are not predicting price declines will go that far.
Existing-home prices will probably slip 1.3% to a median of $219,000 in 2007 before rising 1.3% next year to $221,800, according the National Association of Realtors. The median new-home price should drop 2.1% to $241,400 this year, and then increase 1% in 2008 to $243,900. ”
A 10% drop nation wide means in many areas drops of 80%.
Costar Group
Although I don’t see this happening in decent locations, I certainly think it could happen in some areas. For example, there are multi-family properties/condo conversions in and around Boston, where the neighborhoods aren’t so great, where the prices are/were around $350k per unit. I could see those types of units going to $60k - $80k. They are basically entry level (2bd/1ba) apartments. There is no way they were ever truly worth the $350 that the fools paid for them. I remember, only 10 years ago, when you could buy a three family building for $150K. It was really only a result of re-mania that the sold at stupid prices.
Now, I don’t see a well built 3,000 sq ft colonial, 4 bed/2.5 ba, 2 car garage on an acre of land in decent town going from $700k to $140k (20 cents on the dollar). I think even 50 cents on the dollar would be a stretch, but plausible. I see 75 cents on the dollar as the number for me personally, from $800k to $600k..or maybe from $600k to $450k …yeah, that might do it. Not some stucco box, though.
You don’t understand they the builders have been overbuilding for years. No demand for all the available housing even at 50% off the current prices!
Hi Pen:
On this blog, we have used a total of 5 different calculations, and all of them have concluded that prices should fall about 50%, adjusted for inflation. Let me see if I can remember all the methods we used:
1. Price-to-rent ratio
2. Historical price-to-income ratio
3. “Affordability” (as defined by the ability to pay a certain mortgage at a certain income regardless of historical ratios)
4. Reversion to the mean
5. Technical (chartist) analysis
All these other numbers that people are throwing out (5%, 10%, 20%, etc.) are really just gut-feeling numbers, and are not borne out by any realistic model or calculation.
You are correct, but when this all comes crashing down in a ball of flame, it will zoom right by fundamental price levels. So 50% off will be a conservative estimate of price depreciation in the hyper bubbly coastal markets.
I’ve been amazed at how well all of the above mentioned ways to estimate fundamental values have worked for our market here in Pullman, WA. Everything consistently points to a 20% correction to fundamentals. So maybe we see 30% price declines from peak to bottom?
If you look at the numbers, they are hard to believe. We’ve got an enormous amount of subprime mortgages, which will keep resetting, at higher & higher numbers. More and more families will be out on the street. We currently have around 5 million homes for sale in the U.S. Another 2 million homes are expected to add to the inventory. it can only have 1 effect: a drastic lowering of prices.
Double whammy: credit is being tightened, it’s getting really difficult for buyers to qualify for loans = prices will be forced down even more.
As if that wasn’t bad enough, layoffs are going to start increasing. Why? Because our economy is driven (about 40%) by the housing / real estate market alone. That includes real estate people, building contractors, remodelers, painters and so on. But it also includes stores like Home Depot, furniture stores and so on.
Once that driving force starts to falter, it’s going to accelerate at a stronger pace and become a self fulfilling prophecy. More: Commercial loans are starting to reset, at higher interest rates. This week: about $440 billion dollars worth of commercial notes will be reset. These are in fact higher than the residential real estate market.
The ONLY result can be Housing Prices, on par with the Crash of 1929.
Cliss,
I tend to agree with your analysis. When the full throttle of Alt-A and prime defaults start in earnest, it will be cash on the barrelhead for them that has cash. 40% of the economy may be driven by re/housing and related fields, but banking and finance are going to take major hits–including I suspect, layoffs in the tens of thousands. And since these are jobs with benefits and relatively high salaries, the cascade effect will be huge.
The real question is, do you want RE at any price, given that property taxes are going to have to explode to cover public pensions, public services, etc. and the tax base will be much reduced.
Some California employment news
October 17
BNC Mortgage LLC is closing down and laying off 175 employees at 1885 Gateway Blvd. in Concord; 198 employees at 2301 Campus Drive in Irvine; 199 employees at 1901 Main St. in Cypress; 39 employees at 500 N. Central Ave. in Glendale; and 89 employees at 2275 Sampson Ave., Suite 200 in Corona on Oct. 22.
· Bob Baker Ford is laying off 50 employees at 730 Camino Del Rio North in Camino De La Siesta on Oct. 31.
· Countrywide Financial Corp in Calabasas eliminated nearly 5,000 jobs last month as its business has slid due to lower lending volume and increasing delinquencies and defaults. It ended September with 55,932 employees, down from 60,867 in August. Countrywide is eliminating as many as 12,000 jobs, or 20 percent of its work force.
· Earthlink Inc. is closing down and laying off 87 employees at 100 Pine St., Suite 1100 in San Francisco; and 226 employees at 2947 Bradley St. in Pasadena on Oct. 28.
· HB Suspension Products is closing down and laying off 55 employees at 28209 Avenue Standford in Valencia on Oct. 31.
· Interstate Brands Corp. is closing down and laying off 103 employees at 1955 Julian Ave. in San Diego; 231 employees at 6841 San Fernando Road in Glendale; 24 employees at 2024 Placentia Ave. in Costa Mesa; 29 employees at 525 W. Valencia St. in Fullerton; 30 employees at 1506 W. 1st. St. in Santa Ana; 34 employees at 901 E. Orangethorpe in Anaheim; 41 employees at 17201 S. Figueroa in Gardena; 43 employees at 2605 E. 67th St. in Long Beach; 486 employees at 2801 South Towne Ave. in Pomona;55 employees at 2330 Ripple St. in Los Angeles; and 76 employees at 5849 Crocker St. in Los Angeles on Oct. 28.
· Invensys Control Systems is laying off 181 employees at 100 W. Victoria St. in Long Beach on Oct. 30.
· Jacuzzi Whirlpool Bath is laying off 236 employees at 14880 Monte Vista Ave. in Chino on Oct. 22.
· Jensen Industries Inc. is closing down and laying off 64 employees at 1946 E. 46th St. in Los Angeles starting this week.
· Lexicon Marketing Inc. is laying off 79 employees at 640 S. San Vicente Blvd. in Los Angeles on Oct. 30.
· Lockheed Martin Space Systems Company is laying off 300 employees at 1111 Lockheed Martin Way in Sunnyvale on Oct. 22.
· Norcal Waste Services Inc. is closing down and laying off 101 employees at 3514 Every St. in Los Angeles on Oct. 31.
· Northrop Grumman Technical Services is closing down and laying off 154 employees at Bldg 6525, 137 13th St. in Vandenberg AFB on Oct. 29.
· Option One Mortgage Corp. is closing down and laying off 50 employees at 4256 Hacienda Drive in Pleasanton starting this week.
· Party America is closing down and laying off 45 employees at 980 Atlantic Ave., Suite 103 in Alameda on Oct. 31.
· Scios Corp. is laying off 25 employees at 1900 Charleston Road in Mountain View starting this week.
· The Impac Cos. is laying off 274 employees at 19500 Jamboree Road in Irvine on Oct. 29.
· Toys R Us is closing down and laying off 59 employees at 5793 Martin Road in Baldwin Park on Oct. 31.
· Veolia Transportation is laying off 355 employees at 95 Younger Ave. in San Jose starting this week.
· Wells Fargo & Co. is laying off 88 employees at 649 Lincoln Way in Auburn starting this week.
· ZipRealty Inc. is eliminating positions in the corporate headquarters at 2000 Powell St., Suite 1555, in Emeryville and in field offices.
It is all contained.
Hoz say it ain’t so. Toys R Us. What will all those kiddies in Baldwin Park do this Christmas?
Tis the season to feel Holly.
“Tis the season to feel Holly.”
Really?
Guess Holly will be feeling jolly
Wow. Exhaustive post. Thank you.
In what is probably not a coincidence, it was remarked from the pulpit of my church serving eastside Costa Mesa and part of Newport Beach this Sunday that the congregation was experiencing some elevated “church welfare” needs.
I got the impression this was a subtle request for contributions. Since I suspect one of the families in question is that of my friend who KB Homes just let go — he was one of the last guys standing, evidently — I’m planning to do a bit. OTOH, if the need is for the obnoxious burn-the-bubble-believing-heretics Realtor in the congregation, I’ll maybe contribute some stale bread I was going to let my kids feed the ducks.
er…maybe a little too much personal info there, now that I think about it. All you Realtors who’ve figured out which church I’m talking about, you’re not the one I’m talking about. And I’m the other Thomas, not the one you’ve got in mind. In fact, I was just passing through from…St. George. Yeah. That’s it.
Anyone wants to delete the last paragraph of the above post (hi, Ben!), that’s fine with me.
That’s funny. Probably too late to delete.
Boston Scientific (HQ in MA, but gobs of employees in CA too) is going to lay off 20-25% of its employees.
“Boston Scientific (HQ in MA, but gobs of employees in CA too) is going to lay off 20-25% of its employees”
Was once at their location in Sylmar. Very impressed by their operation though only dealt with distribution/shipping. (You can tell a lot about a company just by the way the distribution dept is run).
“Interstate Brands Corp. is closing down and laying off…”
Most of their locations in LA/OC areas are in older industral strips with large immigrant hispanic populations. The vast majority of the layoffs i would guess are low-skilled recent immigrants who make up the vast majority of the workers in the grocery/foodstuff production/processing/distribution centers of greater LA metro/OC region. During down times it is always the lowliest unskilled at the bottom of the labor chain who get axed by corporations.
Anyone thinking recession here?
Look for a lot more idle out-of-work immigrants hanging around on street corners or in their apts/houses in LA.
Gov’t/church/private Food banks will do a booming business.
I realize that Zillow isn’ that accurate, but FWIW. BIL bought my home at 400K in Jan 06. Well, well, well. Zillow is showing $400,547. By the time we take out that commission and moving expense + interest and taxes already paid, that baby is leaking money and FAST NOW.
Keep in mind I mentioned last month that he wanted to sell so he could sit on his big fat pile o’ cash and ride this out so he could buy an even larger home (as if 3 bed and 1600 sq. ft. isn’t enough).
I wonder how all that is working out right now? I better not ask. Glad we moved 65 miles away. That still may not be far enough over the next 5 years.
Slip slidin’ away. The equity that is!
The house bust was the lead article on the front page of today’s L.A. times. All the housing bubble bloggers who were here in 05 and before ought to be crowing today, and that, by the way, is the opposite of eating crow.
I wish I had a nickel for every time someone called me a bitter renter, or just bitter altogether in ‘05. LOL. I’d have a house down payment!
Angelo Mozillo’s stock sales are now under investigation by the SEC. This just on CNBC.
he should be investigated for looking like carrot too.
No, no–carrots are wholesome and good. Therefore that Orange Man is not at all carroty, since he’s an unnatural agglomeration of…well, of something. I can see him, you can see him, so he’s there, and not simply a terrifying hallucination. Ickiness Squared? That’s the best I can do as far as theorizing. I’d have to put on a HazMat suit and probe him to determine his composition.
I will eat some carrotts… I’ll pass on the Mozillo though.
Orangelo looks like an oompa loompa
Tin foil hat time
My guess is he goes to court, looses, and just before the settlement he dies of a heart attack in Aspen or Vail. His body is immediately cremated.
My guess is that he’s been working on his tan in anticipation of his move to Dubai I think he and Ken bought one of those man made islands shaped like the US.
bummed, since i missed an opportunity to short this dog once again
On the Yahoo homepage too. Captain Sleazeball of the housing bubble, no argument there,.
see this post on the yahoo message board about CFC.
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=tm&bn=3223&tid=194093&mid=194093&tof=1&frt=2
“Our reputation for integrity and responsibility is illustrated by our commitment to diversity, ethics, lending and philanthropy.”
My husband has recently been harping on his observation that the companies who are most vocal about their integrity, commitment to truth, love, and beauty, etc., are always the ones who have a secret plan to kill you and collect the insurance money.
That’s a heckuva good observation. Corporations are not our friends - they are there merely for providing a good or service - not fulfillment and emotional nuturing. But New Agers have to find acceptance somewhere since they never found it at home I guess.
funny how when a shoeshine boy momment happens, the out of no-where dollar rally makes some sense…
Im the shoeshine boy.
Get ready for a new dollar.
OT Dubai is making oceanfront !
see, they are making more land
This is another shoe that will be dropping further down the cycle, and it will effect the very wealthy. Lets say you made considerable money in CEO options, stock bonus, you get the picture. Now you have been out buying very expensive property both large and small.
So at some point you decide to get into the commerical market and start buying up shopping centers etc, so what do you use for money (all the high price RE is collateral for these loans) sooner or later the banks will be making margin calls and the big wigs will have to unload so very expensive property at bargin prices!
Interesting. HBB hero Robert Shiller calls for a government bailout on The Lehrer Newshour yesterday. Full transcript:
http://www.pbs.org/newshour/bb/business/july-dec07/jitters_10-16.html
“MARGARET WARNER: So very briefly, before we go, Professor Shiller, do you think the government, whether it’s the Fed or the administration, is going to have to do more and, if so, what?
ROBERT SHILLER: Well, I think that we have to remember the homeowner, the small person who is caught up in this mess. And so I think that something like a bailout for these people, to either adjust the terms of their bankruptcy or to encourage lending to them through FHA, or Fannie or Freddie, are called for.”
So Fannie and Freddie can lend to them and then repo their homes? They just don’t get it, some people just aren’t destined to be homeowners. They can try but with it come taxes, insurance, paying their bills. Some people just can’t make enough to cover that. Just let the free market be healthy and correct itself without Government interference.
Sick of privatization of profits and the socializing of losses. They can’t be capitalist on the way up and communists on the way down.
Oh wait, they are already doing that.
Allowing a judge to adjust the terms of bankruptcy is hardly a bailout. It simply means the FB can walk debt free should he choose bankruptcy.
It probably will hasten the price decline since future lenders will have to make provisions for having absolutely no recourse for many of their loans above the actual property. Higher rates, fewer future buyers.
It makes sense — providing it is only applied to borrowers who didn’t “stretch” their income on the app, and who only bought one property.
OT:
Since I am barely literate, Mr. Roubini’s writings (as are most of the HBB’s writers) make sense in an intelligible manner.
From Mr. Roubini’s blog
“The credit and liquidity crunch of this past summer was just the first sign that this toxic and combustible mix of elements could lead to a financial meltdown. It may only take any small match to trigger it: the collapse of a large hedge fund, a bankruptcy declaration by a large U.S. corporation, a trade war with China, a further spike in oil prices, a major terrorist incident, or wider conflict in the Middle East. There is indeed an embarrassment of riches in events that could trigger a systemic financial-risk episode. A single factor among those discussed above may not be enough to trigger it, but the risk that a variety of such factors may simultaneously emerge is increasing. To avoid such a meltdown, we need many reforms: better regulation and supervision of mortgages and of financial institutions, including the lightly or unregulated hedge funds; more transparency on who is holding which risky assets; better risk management by investors; avoidance of a bailout of reckless lenders and investors; a more competitive market for ratings as the small set of only three rating agencies seriously misread very complex and risky instruments; and hopefully a modest and soft—rather than hard—landing for the U.S. economy. We need these and other reforms. Otherwise, the next Black Monday will be a whole lot darker.”
Yep, much better written than I could do.
think about this. the last 27 years have been ok growth for the US with periods of great growth, or so we are told. however, the strength of the economy was based on two things that are coming to an end. CHEAP DEBT(and the willingness to lend it) and CHEAP OIL. now we’ll see what an economy not on the steriods of cheap credit and low inflation(of the CPI kind, not the M3 kind). it ain’t gonna be pretty. now we’ll see what real economic growth we will(or won’t) have.
“‘We’re just trying to stimulate buyers, stimulate the market,’ Smallson said.”
Well, How about 100K off the list to start with!
“Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. ‘We decided there was no sense in giving it away,’ said Gorman… with a strangely calm, glassy eyed look……it felt good, so good to say that ….so he begain repeating the words again and again…as he climbed onto the granite counter tops and began rocking back and forth…
Here is an amusing article on the new ‘cr@p’ fund that the banks are setting up:
“The Cracks in Wall Street’s Hall of Mirrors
Time for the Banks to Face the Hangman”
http://www.counterpunch.org/whitney10172007.html
Lori Staehling, next year’s president of the San Diego Association of Realtors, said she could not ’sugar-coat’ the latest statistics.”
Translation: We’re out of sugar. If we had some, we’d use it.
“Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. ‘We decided there was no sense in giving it away,’ said Gorman. ‘The real estate market will come back at some period. … (We’ll) wait it out.’”
Translation: I’m an idiot. Actually, I could drop the price a bit and still not be giving it away but I’m an idiot.
“The home, owned by Countrywide Financial Corp, now features a homemade sign with ‘Hurry’ and ‘Wow!!’ written on it to entice potential buyers.”
Translation: We’re desperate but we don’t want you to know that we are.
“‘Buyers have essentially gone on strike, and we need more price correction,’ Levy said. ‘In the early 1990s, because sellers got stubborn, it took seven or eight years to recover. I think this market will clear more quickly.’”
Translation: Its different this time because I said so.